What changed in this filing

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Item 1. Financial Statements

2025-10-21 compared with 2025-07-22 · 217 added, 176 removed, 610 unchanged (39% of the section changed)

3 unchanged sentences

in millions, except per share data)

Quarters Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Quarters Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Products $ 15,311 $ 14,472 $ 45,396 $ 43,777

23 unchanged sentences

Consolidated Statements of Comprehensive Income

Quarters Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Quarters Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Net earnings $ 1,619 $ 1,623 $ 3,673 $ 4,809

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Postretirement benefit plans

Amortization, net, net of tax of $ 18 million and $ 35 million in 2025 and $ 5 million and $ 10 million in 2024

Other, net, net of tax of $ 9 million and $ 15 million in 2025 and $ 8 million in 2024

Amortization, net of tax of $ 16 million and $ 51 million in 2025 and $ 6 million and $ 16 million in 2024

Other, net of tax of $ 1 million and $ 17 million in 2025 and $ 3 million and $ 5 million in 2024

( 10 ) 57 157 53

5 unchanged sentences

(in millions, except par value)

September 28,

2025 December 31,

17 unchanged sentences

Contract liabilities 10,259 9,795

Current maturities of long-term debt and commercial paper 3,118 643

Current maturities of long-term debt 1,669 643

Other current liabilities 4,147 3,635

14 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

2025 June 30,

Nine Months Ended

September 28,

2025 September 29,

Operating activities

5 unchanged sentences

Impairment and other charges 66 87

Program losses 1,615 165

Select program losses 1,615 248

Changes in assets and liabilities

15 unchanged sentences

Repayments of long-term debt ( 142 ) ( 168 )

Proceeds from commercial paper, net 1,449 —

Repurchases of common stock ( 2,250 ) ( 2,700 )

8 unchanged sentences

Consolidated Statements of Equity

For the Quarters Ended June 29, 2025 and June 30, 2024

For the Quarters Ended September 28, 2025 and September 29, 2024

Stock Additional

2 unchanged sentences

Comprehensive

Balance at March 30, 2025 $ 233 $ — $ 14,773 $ ( 8,323 ) $ 6,683

Balance at June 29, 2025 $ 232 $ — $ 13,259 $ ( 8,157 ) $ 5,334

Net earnings — — 1,619 — 1,619

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Stock-based awards, ESOP activity and other — 173 — — 173

Balance at September 28, 2025 $ 230 $ — $ 14,053 $ ( 8,102 ) $ 6,181

Balance at June 30, 2024 $ 237 $ — $ 14,707 $ ( 8,769 ) $ 6,175

Balance at March 31, 2024 $ 239 $ — $ 15,222 $ ( 8,811 ) $ 6,650

Net earnings — — 1,623 — 1,623

3 unchanged sentences

Stock-based awards, ESOP activity and other 1 171 — — 172

Balance at June 30, 2024 $ 237 $ — $ 14,707 $ ( 8,769 ) $ 6,175

Balance at September 29, 2024 $ 236 $ — $ 15,657 $ ( 8,693 ) $ 7,200

The accompanying notes are an integral part of these unaudited consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Equity

For the Six Months Ended June 29, 2025 and June 30, 2024

For the Nine Months Ended September 28, 2025 and September 29, 2024

Stock Additional

9 unchanged sentences

1 398 — — 399

Balance at June 29, 2025 $ 232 $ — $ 13,259 $ ( 8,157 ) $ 5,334

Balance at September 28, 2025 $ 230 $ — $ 14,053 $ ( 8,102 ) $ 6,181

Balance at December 31, 2023 $ 240 $ — $ 15,398 $ ( 8,803 ) $ 6,835

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2 417 — — 419

Balance at June 30, 2024 $ 237 $ — $ 14,707 $ ( 8,769 ) $ 6,175

Balance at September 29, 2024 $ 236 $ — $ 15,657 $ ( 8,693 ) $ 7,200

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Our actual results may differ materially from these estimates.

Estimates inherent in the preparation of our consolidated financial statements include, but are not limited to, accounting for sales and cost recognition;

Estimates inherent in the preparation of our consolidated financial statements include, but are not limited to, accounting for sales, cost recognition and profit booking rates;

postretirement benefit plans;

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We eliminate intercompany balances and transactions in consolidation.

On June 26, 2025, we paid $ 360 million, in cash, to close our acquisition of Amentum’s Rapid Solutions business (Rapid Solutions).

The acquisition of Rapid Solutions is expected to enhance our Space business segment′s capabilities, particularly in radar and payload technology, and support our customers′ evolving needs for domain awareness and real- time missions.

The purchase price was allocated to the estimated fair value of net tangible and intangible assets acquired, with any excess purchase price recorded as goodwill.

As a result, we recorded goodwill of $ 195 million at our Space business segment.

Additionally, certain prior year amounts in the consolidated statements of cash flows have been reclassified within operating activities to conform to the current year’s presentation.

As previously disclosed, during the second quarter of 2025, we paid $ 360 million, in cash, for the acquisition of Amentum’s Rapid Solutions business (Rapid Solutions) and recorded goodwill of $ 195 million at our Space business segment.

The final determination of the fair values of certain assets and liabilities will be completed within the measurement period of up to one year from the acquisition date.

Rapid Solutions operates within our Space business segment and the financial results of Rapid Solutions have been included within our operating results in the period post-acquisition.

We close our books and records on the last Sunday of each interim calendar quarter, which was on June 29 for the second quarter of 2025 and June 30 for the second quarter of 2024, to align our financial closing with our business processes.

We close our books and records on the last Sunday of each interim calendar quarter, which was on September 28 for the third quarter of 2025 and September 29 for the third quarter of 2024, to align our financial closing with our business processes.

The consolidated financial statements and tables of financial information included herein are labeled based on that convention.

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These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024 (2024 Form 10-K).

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

NOTE 2 - EARNINGS PER COMMON SHARE

The weighted average number of shares outstanding used to compute earnings per common share were as follows (in millions):

Quarters Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Quarters Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Weighted average common shares outstanding for basic computations 231.9 237.5 233.3 239.0

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We compute basic and diluted earnings per common share by dividing net earnings by the respective weighted average number of common shares outstanding for the periods presented.

Our calculation of diluted earnings per common share also includes the dilutive effects for the assumed vesting of outstanding restricted stock units (RSUs) and performance stock units (PSUs) based on the treasury stock method.

There were no significant anti-dilutive equity awards during the quarters and six months ended June 29, 2025 and June 30, 2024.

Our calculation of diluted earnings per

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

common share also includes the dilutive effects for the assumed vesting of outstanding restricted stock units (RSUs) and performance stock units (PSUs) based on the treasury stock method.

There were no significant anti-dilutive equity awards during the quarters and nine months ended September 28, 2025 and September 29, 2024.

Basic and diluted weighted average common shares outstanding decreased in 2025 compared to 2024 due to share repurchases.

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Summary operating results for each of our business segments were as follows (in millions):

Quarters Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Quarters Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Aeronautics $ 7,256 $ 6,487 $ 21,733 $ 20,609

9 unchanged sentences

Total operating costs and expenses $ 16,579 $ 15,236 $ 50,102 $ 46,825

Operating profit (loss) (a)

Operating profit (a)

Aeronautics $ 682 $ 659 $ 1,304 $ 2,089

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Sales by products and services, contract type, customer, and geographic region were as follows (in millions):

Quarter Ended June 29, 2025

Quarter Ended September 28, 2025

Aeronautics MFC RMS Space Total

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Total sales $ 7,256 $ 3,624 $ 4,373 $ 3,356 $ 18,609

Six Months Ended June 29, 2025

Nine Months Ended September 28, 2025

Aeronautics MFC RMS Space Total

21 unchanged sentences

Notes to Consolidated Financial Statements (unaudited) (continued)

Quarter Ended June 30, 2024

Quarter Ended September 29, 2024

Aeronautics MFC RMS Space Total

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Total sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104

Six Months Ended June 30, 2024

Nine Months Ended September 29, 2024

Aeronautics MFC RMS Space Total

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Our Aeronautics business segment includes our largest program, the F-35 Lightning II, an international multi-role, multi-variant, stealth fighter aircraft.

Sales for the F-35 program represented approximately 28 % and 27 % of our total consolidated sales for the quarter and six months ended June 29, 2025 and 26 % and 25 % of our total consolidated sales for the quarter and six months ended June 30, 2024.

Sales for the F-35 program represented approximately 26 % of our total consolidated sales for both the quarter and nine months ended September 28, 2025 and 22 % and 24 % of our total consolidated sales for the quarter and nine months ended September 29, 2024.

Total assets for each of our business segments were as follows (in millions):

September 28,

2025 December 31,

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Contract assets and contract liabilities were as follows (in millions):

September 28,

2025 December 31,

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Contract assets are primarily driven by the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations for which we have not yet billed our customers.

During the six months ended June 29, 2025, contract assets increased $ 1.9 billion primarily due to the F-35 program at Aeronautics.

There were no significant credit or impairment losses related to our contract assets during the quarters and six months ended June 29, 2025 and June 30, 2024.

Contract liabilities increased $ 66 million during the six months ended June 29, 2025, primarily due to payments received in excess of revenue recognized on performance obligations.

During the quarter and six months ended June 29, 2025, we recognized $ 1.3 billion and $ 4.5 billion of our contract liabilities at December 31, 2024 as revenue.

During the quarter and six months ended June 30, 2024, we recognized $ 1.7 billion and $ 4.1 billion of our contract liabilities at December 31, 2023 as revenue.

During the nine months ended September 28, 2025, contract assets increased $ 1.0 billion primarily due to the F-35 program at Aeronautics.

There were no significant credit or impairment losses related to our contract assets during the quarters and nine months ended September 28, 2025 and September 29, 2024.

Contract liabilities increased $ 464 million during the nine months ended September 28, 2025, primarily due to payments received in excess of revenue recognized on performance obligations (primarily for international F-35 at Aeronautics and Sikorsky at RMS).

During the quarter and nine months ended September 28, 2025, we recognized $ 1.0 billion and $ 5.6 billion of our contract liabilities at December 31, 2024 as revenue.

During the quarter and nine months ended September 29, 2024, we recognized $ 866 million and $ 4.9 billion of our contract liabilities at December 31, 2023 as revenue.

Lockheed Martin Corporation

2 unchanged sentences

Inventories consisted of the following (in millions):

September 28,

2025 December 31,

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All other pre-contract costs, including start-up costs, are expensed as incurred.

As of both June 29, 2025 and December 31, 2024, $ 1.5 billion of pre-contract costs (primarily F-35 and classified programs at Aeronautics) were included in work-in-process inventories.

As of September 28, 2025 and December 31, 2024, $ 1.7 billion and $ 1.5 billion of pre-contract costs (primarily F-35 and classified programs at Aeronautics and Sikorsky programs at RMS) were included in work-in-process inventories.

NOTE 6 - POSTRETIREMENT BENEFIT PLANS

The pretax FAS (expense) income related to our qualified defined benefit pension plans consisted of the following (in millions):

Quarters Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Quarters Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Qualified defined benefit pension plans

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We record the service cost component of FAS (expense) income for our qualified defined benefit pension plans in consolidated operating profit and the non-service components in non-service FAS pension (expense) income on our consolidated statements of earnings.

Total FAS income for our other postretirement benefit plans was not material during the quarters and six months ended June 29, 2025 and June 30, 2024 and is part of other non-operating income, net on our consolidated statements of earnings.

Total FAS income for our other postretirement benefit plans was not material during the quarters and nine months ended September 28, 2025 and September 29, 2024 and is part of other non-operating income, net on our consolidated statements of earnings.

The required funding of our qualified defined benefit pension plans is determined in accordance with the Employee Retirement Income Security Act of 1974 (ERISA), as amended, along with consideration of CAS and Internal Revenue Code rules.

We made no contributions to our qualified defined benefit pension plans during the quarters and six months ended June 29, 2025 and June 30, 2024.

We made no contributions to our qualified defined benefit pension plans during the quarters and nine months ended September 28, 2025 and September 29, 2024.

Lockheed Martin Corporation

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Accordingly, unless otherwise indicated below in our discussion of legal proceedings, a reasonably possible loss or range of loss associated with any individual legal proceeding cannot be estimated.

Securities-Related Actions

On July 28, 2025, a putative class action was filed in United States District Court for the Southern District of New York against us and certain current and former members of our senior management.

The shareholder plaintiff asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (Exchange Act), on behalf of persons and entities that purchased or otherwise acquired our securities between January 23, 2024 and July 21, 2025.

Plaintiff seeks unspecified losses allegedly caused by alleged misstatements about certain programs in the Aeronautics and MFC business segments, certain international helicopter programs in the Sikorsky business, and certain asset impairments and tax matters, which were allegedly revealed to be false when we announced estimated losses relating to those programs and matters.

In addition, based on allegations substantially similar to the above-described securities class action, on September 11, 2025, a shareholder derivative complaint was filed in the United States District Court for the District of Maryland against current and former members of our Board of Directors and senior management.

We are named as a nominal defendant.

The derivative complaint asserts claims under Sections 14(a), 20(a), and 10(b) of the Exchange Act, as well as claims for breach of fiduciary duty, abuse of control, gross mismanagement, corporate waste, unjust enrichment, and contribution.

Based on the information available to date, we do not believe that these matters will have a material adverse effect on our results of operations, financial condition, or liquidity.

Lockheed Martin v.

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Finally, our declaratory judgment action was later amended to include claims for monetary damages against the MTA of approximately $ 95 million.

This matter was taken under submission by the District Court in December 2014, after a five-week bench trial and the filing of post-trial pleadings by the parties.

This matter was taken under submission by the District Court in December 2014, after a five-

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

week bench trial and the filing of post-trial pleadings by the parties.

We continue to await a decision from the District Court.

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These proceedings could result in fines, penalties, cost reimbursements or contributions, compensatory or treble damages or non-monetary sanctions or relief.

Based on our estimates, at June 29, 2025 and December 31, 2024, the aggregate amount of liabilities recorded relative to environmental remediation matters was $ 669 million and $ 677 million, respectively, most of which are recorded in other noncurrent liabilities on our consolidated balance sheets.

We have recorded assets for the portion of environmental costs that are probable of future recovery totaling $ 611 million and $ 619 million at June 29, 2025 and

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

December 31, 2024, respectively, most of which are recorded in other noncurrent assets on our consolidated balance sheets.

Based on our estimates, at September 28, 2025 and December 31, 2024, the aggregate amount of liabilities recorded relative to environmental remediation matters was $ 667 million and $ 677 million, respectively, most of which are recorded in other noncurrent liabilities on our consolidated balance sheets.

We have recorded assets for the portion of environmental costs that are probable of future recovery totaling $ 610 million and $ 619 million at September 28, 2025 and December 31, 2024, respectively, most of which are recorded in other noncurrent assets on our consolidated balance sheets.

We are monitoring or investigating a number of former and presently operating facilities for potential future remediation.

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In addition to the proceedings and potential proceedings discussed above, potential new regulations concerning perchlorate and hexavalent chromium at the federal and state level could increase our cleanup costs.

If regulations require substantially more stringent clean-up levels of perchlorate or hexavalent chromium, we expect a material increase in both our estimates for environmental liabilities and the related assets for the portion of costs that are probable of future recovery.

The amount that would be allocable to our non-U.S.

Government contracts or that is determined not to be recoverable under U.S.

Government contracts would be expensed, which may have a material effect on our earnings in any particular reporting period.

We also are evaluating the potential impact of new, existing, and contemplated requirements addressing a class of chemicals known generally as per- and polyfluoroalkyl substances (PFAS).

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Regulations requiring very low PFAS contaminant levels in drinking water could eventually lead to increased cleanup costs at a number of our environmental remediation sites.

Letters of Credit, Surety Bonds and Third-Party Guarantees

If regulations require substantially more stringent clean-up levels of perchlorate or hexavalent chromium or increased cleanup costs at our sites associated with PFAS, we expect a corresponding increase in both our estimates for environmental liabilities and the related assets for the portion of costs that are probable of future recovery.

The portion of those costs that is not expected to be recoverable under U.S.

Government contracts would be expensed in the quarter in which the liability becomes probable.

Letters of Credit and Surety Bonds

We have entered into standby letters of credit and surety bonds issued on our behalf by financial institutions, and we have directly issued guarantees to third parties primarily relating to advances received from customers and the guarantee of future performance on certain contracts.

Letters of credit and surety bonds generally are available for draw down in the event we do not perform.

We had total outstanding letters of credit and surety bonds aggregating $ 2.6 billion and $ 2.7 billion at June 29, 2025 and December 31, 2024.

Additionally, we may guarantee the contractual performance of third parties such as joint venture partners.

At June 29, 2025 and December 31, 2024, third-party guarantees totaled $ 105 million and $ 351 million, of which approximately 83 % and 30 % related to guarantees of contractual performance of joint ventures to which we currently are or previously were a party.

These amounts represent our estimate of the maximum amounts we would expect to incur upon the contractual non-performance of the joint venture, joint venture partners or divested businesses.

Generally, we also have cross-indemnities in place that may enable us to recover amounts that may be paid on behalf of a joint venture partner.

Third-party guarantees do not include guarantees issued on behalf of subsidiaries and other consolidated entities.

In determining our exposures, we evaluate the reputation, performance on contractual obligations, technical capabilities and credit quality of our current and former joint venture partners and the transferee under novation agreements all of which include a guarantee as required by the FAR.

At June 29, 2025 and December 31, 2024, there were no material amounts recorded in our financial statements related to third-party guarantees or novation agreements.

We had total outstanding letters of credit and surety bonds aggregating $ 2.8 billion and $ 2.7 billion at September 28, 2025 and December 31, 2024.

Other Contingencies

2 unchanged sentences

Government investigations of us, whether relating to U.S.

Government contracts or conducted for other reasons, could result in civil or criminal penalties and administrative sanctions, including reductions of the value of contracts, contract

Government contracts or conducted for other reasons, could

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

modifications or terminations, forfeiture of profits, suspension of payments, repayments, fines or penalties being imposed upon us, suspension, proposed debarment, debarment from eligibility for future U.S.

result in civil or criminal penalties and administrative sanctions, including reductions of the value of contracts, contract modifications or terminations, forfeiture of profits, suspension of payments, repayments, fines or penalties being imposed upon us, suspension, proposed debarment, debarment from eligibility for future U.S.

Government contracting, or suspension of export privileges.

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Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following (in millions):

June 29, 2025 December 31, 2024

September 28, 2025 December 31, 2024

Total Level 1 Level 2 Total Level 1 Level 2

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All of these investments are in securities without readily determinable fair values (privately held securities), which are measured initially at cost and are then adjusted to fair value only if there is an observable price change or reduced for impairment, if applicable.

The carrying amounts of the investments were $ 601 million and $ 600 million at June 29, 2025 and December 31, 2024.

Due to adjustments in valuation and/or sales of investments, we recorded net gains of $ 19 million ($ 14 million, or $ 0.06 per share, after tax) and $ 20 million ($ 15 million, or $ 0.06 per share, after tax) during the quarter and six months ended June 29, 2025.

We recorded net gains of $ 9 million ($ 7 million, or $ 0.03 per share, after-tax) and $ 14 million ($ 11 million, or $ 0.04 per share, after-tax) during the quarter and six months ended June 30, 2024.

The carrying amounts of the investments were $ 599 million and $ 600 million at September 28, 2025 and December 31, 2024.

Net gains or losses recorded due to adjustments in valuation and/or sales of investments were not material for the quarters and nine months ended September 28, 2025 and September 29, 2024.

We use derivative instruments principally to reduce our exposure to market risks from changes in foreign currency exchange rates and interest rates.

1 unchanged sentence

We do not enter into or hold derivative instruments for speculative trading purposes.

These contracts hedge forecasted foreign currency transactions in order to minimize fluctuations in our earnings and cash flows

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

contracts hedge forecasted foreign currency transactions in order to minimize fluctuations in our earnings and cash flows associated with changes in foreign currency exchange rates.

associated with changes in foreign currency exchange rates.

We designate foreign currency hedges as cash flow hedges.

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We also may enter into derivative instruments that are not designated as hedges and do not qualify for hedge accounting, which are intended to minimize certain economic exposures.

The aggregate notional amount of our outstanding interest rate swaps was $ 1.3 billion at June 29, 2025 and December 31, 2024.

The aggregate notional amount of our outstanding foreign currency hedges was $ 7.9 billion and $ 7.5 billion at June 29, 2025 and December 31, 2024.

The fair values of our outstanding interest rate swaps and foreign currency hedges at June 29, 2025 and December 31, 2024 were not significant.

Derivative instruments did not have a material impact on net earnings and comprehensive income during the quarters and six months ended June 29, 2025 and June 30, 2024.

The aggregate notional amount of our outstanding interest rate swaps was $ 1.3 billion at both September 28, 2025 and December 31, 2024.

The aggregate notional amount of our outstanding foreign currency hedges was $ 7.0 billion and $ 7.5 billion at September 28, 2025 and December 31, 2024.

The fair values of our outstanding interest rate swaps and foreign currency hedges at September 28, 2025 and December 31, 2024 were not significant.

Derivative instruments did not have a material impact on net earnings and comprehensive income during the quarters and nine months ended September 28, 2025 and September 29, 2024.

The impact of derivative instruments on our consolidated statements of cash flows is included in net cash provided by operating activities.

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The carrying amounts for cash and cash equivalents, receivables and accounts payable approximated their fair values.

The estimated fair value of our outstanding debt and commercial paper was $ 21.6 billion and $ 20.2 billion at June 29, 2025 and December 31, 2024.

The outstanding principal amount of debt and commercial paper, including short-term and long-term debt, was $ 22.9 billion and $ 21.6 billion at June 29, 2025 and December 31, 2024, excluding $ 1.2 billion and $ 1.3 billion of unamortized discounts and issuance costs at June 29, 2025 and December 31, 2024.

The estimated fair value of our outstanding debt was $ 22.5 billion and $ 20.2 billion at September 28, 2025 and December 31, 2024.

The outstanding principal amount of debt, including short-term and long-term debt, was $ 23.4 billion and $ 21.6 billion at September 28, 2025 and December 31, 2024, excluding $ 1.2 billion and $ 1.3 billion of unamortized discounts and issuance costs at September 28, 2025 and December 31, 2024.

The estimated fair values of our outstanding debt were determined based on the present value of future cash flows using model-derived valuations that use observable inputs such as interest rates and credit spreads (Level 2).

1 unchanged sentence

Repurchases of Common Stock

During the six months ended June 29, 2025, we repurchased 2.7 million shares of our common stock in open market purchases for $ 1.3 billion.

The total remaining authorization for future common stock repurchases under our share repurchase program was $ 8.1 billion as of June 29, 2025.

During the nine months ended September 28, 2025, we repurchased 5.0 million shares of our common stock in open market purchases for $ 2.3 billion.

The total remaining authorization for future common stock repurchases under our share repurchase program was $ 7.1 billion as of September 28, 2025.

In October 2025, subsequent to our third quarter, our Board of Directors authorized an increase of $ 2.0 billion to our share repurchase program, increasing our total authorization of the current program to $ 9.1 billion for future purchases.

As we repurchase our common shares, we reduce common stock for the $ 1 of par value of the shares repurchased, with the excess purchase price over par value recorded as a reduction of additional paid-in capital.

If additional paid-in capital is reduced to zero, we record the remainder of the excess purchase price over par value as a reduction of retained earnings.

We paid cash dividends of $ 1.6 billion ($ 6.60 per share) during the six months ended June 29, 2025.

Additionally, we declared a third quarter 2025 dividend totaling approximately $ 770 million ($ 3.30 per share), which will be paid in September 2025.

The total amount of dividends declared may differ from the total amount of dividends paid during a period due to the timing of dividend-equivalents paid on RSUs and PSUs.

These dividend-equivalents are accrued during the vesting period and are paid upon the vesting of the RSUs and PSUs, which primarily occurs in the first quarter each year.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

We paid cash dividends of $ 2.3 billion ($ 9.90 per share) during the nine months ended September 28, 2025.

In October 2025, subsequent to our third quarter, we authorized a fourth quarter 2025 dividend payment of $ 3.45 per share, an increase of $ 0.15 per share over our third quarter 2025 dividend of $ 3.30 per share.

The total amount of dividends declared may differ from the total amount of dividends paid during a period due to the timing of dividend-equivalents paid on RSUs and PSUs.

These dividend-equivalents are accrued during the vesting period and are paid upon the vesting of the RSUs and PSUs, which primarily occurs in the first quarter each year.

Accumulated Other Comprehensive Loss

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Total other comprehensive income 193 157 350

Balance at June 29, 2025 $ ( 8,160 ) $ 3 $ ( 8,157 )

Balance at September 28, 2025 $ ( 8,095 ) $ ( 7 ) $ ( 8,102 )

Balance at December 31, 2023 $ ( 8,704 ) $ ( 99 ) $ ( 8,803 )

Other comprehensive (loss) before reclassifications — ( 32 ) ( 32 )

Other comprehensive income before reclassifications — 23 23

Amounts reclassified from AOCL

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Total reclassified from AOCL 57 30 87

Total other comprehensive income (loss) 38 ( 4 ) 34

Balance at June 30, 2024 $ ( 8,666 ) $ ( 103 ) $ ( 8,769 )

Total other comprehensive income 57 53 110

Balance at September 29, 2024 $ ( 8,647 ) $ ( 46 ) $ ( 8,693 )

(a) Reclassifications from AOCL related to postretirement benefit plans were recorded as a component of FAS (expense) income for each period presented.

These amounts include $ 64 million and $ 19 million, net of tax, for the quarters ended June 29, 2025 and June 30, 2024, which are comprised of the amortization of net actuarial losses of $ 55 million and $ 47 million, and the amortization of net prior service costs (credits) of $ 9 million and $( 28 ) million, for the quarters ended June 29, 2025 and June 30, 2024.

These amounts include $ 65 million and $ 19 million, net of tax, for the quarters ended September 28, 2025 and September 29, 2024, which are comprised of the amortization of net actuarial losses of $ 55 million and $ 47 million, and the amortization of net prior service costs (credits) of $ 10 million and $( 28 ) million, for the quarters ended September 28, 2025 and September 29, 2024.

See “Note 6 - Postretirement Benefit Plans”.

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Significant judgments and assumptions are made in estimating contract sales, costs, and profit.

We estimate profit as the difference between total estimated sales and total estimated costs to complete the contract and recognize that profit as costs are incurred (over time sales recognition) or when the customer accepts the product or service (point in time sales recognition).

We estimate profit as the difference between total estimated sales and total estimated costs to complete the contract and recognize that

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

profit as costs are incurred (over time sales recognition) or when the customer accepts the product or service (point in time sales recognition).

Contract sales may include estimates of variable consideration, including cost or performance incentives (such as award and incentive fees), un-priced change orders, requests for equitable adjustment (REAs), and contract claims.

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Contract costs include significant estimates related to labor, subcontractors, materials, overhead, general and administrative expenses, and costs to fulfill our industrial cooperation agreements, sometimes referred to as offset or localization agreements, required under certain contracts with international customers.

Significant estimates related to

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

costs include the complexity and scope of the work to be performed, labor productivity and availability, labor rates including terms of collective bargaining arrangements, execution by our subcontractors, the availability and cost of materials including any impact from changing costs or inflation, the length of time to complete the performance obligation, overhead and general and administrative cost rates, and estimated useful lives of components and assets, among others.

Significant estimates related to costs include the complexity and scope of the work to be performed, labor productivity and availability, labor rates including terms of collective bargaining arrangements, execution by our subcontractors, the availability and cost of materials including any impact from changing costs or inflation, the length of time to complete the performance obligation, overhead and general and administrative cost rates, and estimated useful lives of components and assets, among others.

In particular, fixed-price development programs involve significant management judgment, as development contracts by nature have elements that have not been done before and thus, are highly subject to future unexpected changes in estimates as described below.

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When estimates of total costs to be incurred on a contract exceed total estimates of the transaction price, a provision for the entire loss is determined at the contract level and is recorded in the period in which the loss is evident, which we refer to as a reach-forward loss.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

The following table presents the effect of profit booking rate adjustments on our financial results (in millions, except per share data):

Quarters Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Quarters Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

Sales $ 371 $ 358 $ 681 $ 1,013

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Diluted earnings per share 1.24 1.24 ( 0.67 ) 3.26

During the quarter ended June 29, 2025, we recorded losses of $ 950 million on an ongoing classified program at our Aeronautics business segment, and $ 570 million on Canadian Maritime Helicopter Program (CMHP) and $ 95 million on Türkish Utility Helicopter Program (TUHP) at our RMS business segment.

During the six months ended June 29, 2025, in

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

addition to the losses above, we recorded $ 125 million of adjustments resulting from favorable performance upon completion on certain commercial civil space programs at Space and an $ 80 million favorable adjustment upon completion of a classified program at Aeronautics.

During the six months ended June 30, 2024 we recognized a reach-forward loss of $ 100 million on a classified program at our MFC business segment.

During the nine months ended September 28, 2025, we recorded losses of $ 950 million on an ongoing classified program at our Aeronautics business segment, $ 570 million on Canadian Maritime Helicopter Program (CMHP) and $ 95 million on Türkish Utility Helicopter Program (TUHP) at our RMS business segment (see discussions that follows within this footnote), and $ 105 million of unfavorable profit adjustments on C-130 programs at our Aeronautics business segment.

In addition to these losses and unfavorable profit adjustments, we also recorded $ 130 million of favorable adjustments upon completion on certain commercial civil space programs at Space, and $ 80 million favorable adjustments upon completion of a classified program at Aeronautics.

During the nine months ended September 29, 2024, we recognized reach-forward losses of $ 145 million on the same ongoing classified program at our Aeronautics business segment ($ 80 million was recognized during the quarter ended September 29, 2024) and of $ 100 million on a classified program at our MFC business segment.

We have various development programs for new and upgraded products, services, and related technologies which have complex design and technical challenges.

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Our development programs are ongoing, and while we believe the cost and fee estimates incorporated in the financial statements are appropriate, the technical complexity of these programs and fixed-price contract structure creates financial risk as estimated completion costs may exceed the current contract value, which could trigger earnings charges, termination provisions, or other financially significant exposures.

These programs have risk for reach-forward losses if our estimated costs exceed our estimated contract revenues, and such losses could be significant to our financial condition and operating results in any period that they are recognized.

These programs have risk for reach-forward losses if our estimated costs exceed our estimated contract revenues, and such losses could be significant to our financial results in any period that they are recognized.

Any such losses are recognized in the period in which the loss is evident.

Aeronautics Classified Program

We have experienced significant performance issues on an existing classified program at our Aeronautics business segment.

The initial phase is on a fixed-price incentive fee contract with fixed-price incentive fee options for additional phases.

Phases within the program involve highly complex design and systems integration and we had previously recognized reach-forward losses amounting to $ 730 million on the initial phase and $ 95 million on the additional phases.

Phases within the program involve highly complex design and systems integration.

Challenges and performance issues continued into 2025 and had a greater impact on schedule and costs than previously estimated.

As a result, Aeronautics performed a comprehensive review of its design, integration, test, and other processes to achieve the technical requirements of the program, which was completed in the second quarter of 2025.

Based on this review and ongoing discussions with the customer and suppliers, Aeronautics made significant changes to its processes and testing approach, resulting in significant updates to the program’s schedule and cost estimates.

As a result, during the second quarter of 2025, we recognized additional reach-forward losses on the initial phase of $ 690 million and on additional phases of $ 260 million.

The drivers that gave rise to the growth recognized on the initial phase and downstream impacts on estimates of cost and profitability in additional phases include:

(1) observed software development performance degradation and integration findings;

(2) learnings in recent software and build experience on other programs;

(3) significant changes in test plan;

(4) safety-critical and other necessary design and engineering changes;

and (5) complete schedule realignment.

As of June 29, 2025, cumulative losses recognized to date on this program were approximately $ 1.4 billion on the initial phase and $ 355 million on the additional phases.

As of June 29, 2025, $ 583 million remained accrued in other current liabilities in our consolidated balance sheet.

We will continue to proactively manage the technical requirements and our performance, the remaining work and any future changes in scope or schedule, and estimated costs to complete the program, including future phases.

We may need to record additional losses in future periods if we experience further performance issues, increases in scope, or cost growth.

There were also new, unanticipated events that occurred in 2025 that impacted the program’s performance, as described below.

As a result of performance issues with the program, Aeronautics performed a comprehensive review of its design, integration, test, and other processes to achieve the technical requirements of the program, which was completed in the second quarter of 2025.

The events that occurred in 2025, and the comprehensive review completed in the second quarter of 2025, resulted in significant changes in the program’s processes and testing approach and led to an extension of the program’s schedule, which drove a substantial increase in cost estimates.

As a result, during the second quarter of 2025, we recognized additional reach-forward losses of $ 950 million across both phases of the program.

The primary drivers of the

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

additional reach-forward losses recognized in the second quarter of 2025 included:

(1) software development performance degradation and integration findings observed over a continued period;

(2) learnings in recent software and build experience on another program specifically relevant to the program;

(3) significant changes in test plan resulting from customer discussions and changes in test execution strategy;

(4) safety-critical and other necessary design and engineering changes in response to certain observed performance degradation and a discrete event;

and (5) complete schedule realignment, including as a result of items (1) through (4).

As of September 28, 2025, cumulative losses recognized to date on this program remained at approximately $ 1.8 billion across both phases.

As of September 28, 2025, $ 530 million of the losses remained accrued in other current liabilities in our consolidated balance sheet.

We continue to proactively manage the technical requirements and our performance, the remaining work and any future changes in scope or schedule, and estimated costs to complete the program, including future phases.

Due to the nature of the highly complex design and systems integration on this program, we may need to record additional losses in future periods if performance issues, increases in scope, or increases in cost from prior estimates indicate that further losses are evident.

Our estimates may change, in particular, as we conduct further development and testing on the program, which may lead to new findings or cause us to modify our expectations or understandings of the risks inherent in the program.

Any such losses could be material to our financial results in any period that they are recognized.

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We will monitor the recoverability of pre-contract costs, which could be impacted by our assessment of the customer’s decision regarding the funding of future phases of the program.

MFC Classified Program

Our MFC business segment has been performing under a competitively bid classified contract, which includes a cost-reimbursable base contract for the initial phase of the program and multiple fixed-price options for additional phases.

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During the first quarter of 2024, we concluded it was probable that the first option would be exercised and recognized a reach-forward loss of approximately $ 100 million.

During the fourth quarter of 2024, we again assessed the likelihood that additional options may be exercised and concluded then that it is probable that all options will be exercised based on performance to date, future requirements of the program, discussions with the customer and suppliers, and anticipated customer funding, among other factors, resulting in the recognition of additional reach-forward

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

losses of approximately $ 1.31 billion.

As of June 29, 2025, cumulative losses recognized on the program remained at approximately $ 1.46 billion in total, of which, $ 1.30 billion remained accrued in other current liabilities in our consolidated balance sheet.

We have contracted with the Canadian government for the Canadian Maritime Helicopter Program (CMHP) at our RMS business segment.

As of September 28, 2025, cumulative losses recognized on the program remained at approximately $ 1.46 billion in total, of which, $ 1.25 billion remained accrued in other current liabilities in our consolidated balance sheet.

Canadian Maritime Helicopter Program

Our RMS business segment has been performing the Canadian Maritime Helicopter Program (CMHP) under contracts with the Canadian government.

The program provides for design, development, and production of CH-148 aircraft (the Original Equipment contract), which is a military variant of the S-92 helicopter, and for logistical support to the fleet (the In Service Support contract) over an extended time period.

While we continue to be in discussions with the Canadian government to potentially restructure certain contractual terms and conditions that may be beneficial to both parties, and entered into a contract modification in 2024 to better align contract scope with the Canadian government’s need, which resulted in a reduction in our contract assets in the fourth quarter of 2024 and first quarter of 2025, any restructuring discussions may be prolonged or unsuccessful, and could result in a contract termination, and are dependent upon Canadian government resources and priorities and other factors outside of our control, such as trade relations with the United States.

The program has experienced performance issues and we have been in discussions with the Canadian government to potentially restructure certain contractual terms and conditions that may be beneficial to both parties.

We entered into a contract modification in 2024 to better align contract scope with the Canadian government’s need, which resulted in a reduction in our contract assets in the fourth quarter of 2024 and first quarter of 2025.

Communications with the customer during the second quarter of 2025 led to subsequent decisions made by us to focus on providing additional mission capabilities, enhanced logistical support, fleet life extension, and revised expectations regarding flight hours.

Based on the ongoing discussions with the customer and decisions made by management, we revised our cost and sales estimates for this program.

As a result, during the second quarter of 2025 we recognized additional losses of $ 570 million on the program.

As of June 29, 2025, cumulative losses recognized on the program were approximately $ 670 million and approximately $ 680 million of contract assets remained on the balance sheet.

Future performance issues or changes in our estimates may affect our ability to recover our costs, including recovery of the contract assets recognized on the balance sheet and our assessment of the reach-forward loss, and potential damages, which could be material to our financial results in any period that they are recognized.

Based on these discussions with the customer and decisions made by management, we revised our cost and sales estimates for this program and recognized additional losses of $ 570 million on the program during the second quarter of 2025.

As of September 28, 2025, cumulative losses recognized on the program remained at approximately $ 670 million and approximately $ 655 million of contract assets remained on the balance sheet.

The final aircraft under the program was delivered to Canada during the third quarter of 2025 and has been subsequently accepted.

Any restructuring discussions may be prolonged or unsuccessful, and could result in a contract termination, and are dependent upon Canadian government resources and priorities and other factors outside of our control, such as trade relations with the United States.

These items in addition to future performance issues or changes in our estimates may affect our ability to recover our costs, including recovery of the contract assets recognized on the balance sheet and our assessment of the reach-forward loss, and potential damages, which could be material to our financial results in any period that they are recognized.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Türkish Utility Helicopter Program

We also have a number of contracts with Türkish industry for the Türkish Utility Helicopter Program (TUHP), which anticipates co-production with Türkish industry for production of T70 helicopters for use in Türkiye, as well as the related provision of Türkish goods and services under buy-back or offset obligations, to include the future sales of helicopters built in Türkiye for sale globally.

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We have provided force majeure notices under the affected contracts and partially stopped work on TUHP effective October 5, 2024.

We have been in discussions with our prime contract customer regarding the path forward for the program in light of the continued impact of the sanctions on our ability to perform under the TUHP contracts and our decision to partially stop work, including recent discussions of a potential mutually agreeable framework to restructure the program, including changing the scope of work.

We have been in discussions with our prime contract customer regarding the path forward for the program in light of the continued impact of the sanctions on our ability to perform under the TUHP contracts and our decision to partially stop work, including the potential to restructure the program, including changing the scope of work.

However, any restructuring discussions may be unsuccessful or may result in changes in our estimates.

Our customer has asserted that it is entitled to penalties and damages, that we do not have the contractual right to stop work and that our decision to stop work may lead to a termination for default and additional penalties and damages.

In light of the status of the continuing discussions with our prime contract customer and the current status of the TUHP program, we recognized a loss of $ 95 million in the second quarter of 2025.

As of June 29, 2025, cumulative losses recognized to date on the program were approximately $ 130 million and the program remains in a contract liability position on the balance sheet.

Additionally, if we are unable to finalize an agreement on mutually agreeable terms, we or our customer could elect to pursue other relief or remedies, which could result in a further reduction in sales, the imposition of penalties or assessment of damages, including the drawdown by the customer of letters of credit and performance bonds, and increased unrecoverable costs, which could be material to our financial results in any period that they are recognized.

Commercial Paper

We have agreements in place with financial institutions to provide for the issuance of commercial paper.

The outstanding balance of commercial paper can fluctuate daily and the amount outstanding during the period may be greater or less than the amount reported at the end of the period.

As of June 29, 2025, we had $ 1.4 billion of commercial paper borrowings with a weighted-average rate of 4.55 %.

As of December 31, 2024 we had no commercial paper borrowings outstanding.

All of our commercial paper borrowings had maturities of up to three months or less from the date of issuance.

We may, as conditions warrant, continue to issue commercial paper backed by our revolving credit facility to manage the timing of cash flows.

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

In light of the status of discussions with our prime contract customer and the current status of the TUHP program, we recognized a loss of $ 95 million in the second quarter of 2025.

As of September 28, 2025, cumulative losses recognized to date on the program remained at approximately $ 130 million and the program remains in a contract liability position on the balance sheet.

Additionally, if we are unable to reach an agreement on mutually agreeable terms, we or our customer could at any time elect to pursue other relief or remedies, which could result in a further reduction in sales, the imposition of penalties or assessment of damages, including the drawdown by the customer of letters of credit and performance bonds, and increased unrecoverable costs, which could be material to our financial results in any period that they are recognized.

Backlog (i.e., unfulfilled or remaining performance obligations) represents the sales we expect to recognize for our products and services for which control has not yet transferred to the customer.

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As the risks on such contracts are successfully retired, the estimated consideration from customers may be reduced, resulting in a reduction of backlog without a corresponding recognition of sales.

As of June 29, 2025, our ending backlog was $ 166.5 billion.

As of September 28, 2025, our ending backlog was $ 179.1 billion.

We expect to recognize approximately 36 % of our backlog over the next 12 months and a total of approximately 61 % over the next 24 months as revenue with the remainder recognized thereafter.

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Army announcement to cancel the Future Attack Reconnaissance Aircraft (FARA) program at the conclusion of fiscal year 2024, for which our Sikorsky business was competing.

Our effective income tax rates were 18.0 % and 16.3 % for the quarter and six months ended June 29, 2025 and 15.8 % for both the quarter and six months ended June 30, 2024.

The higher effective income tax rates for the quarter and six months ended June 29, 2025 were primarily attributable to increased interest expense on our uncertain tax position partially offset by changes in pre-tax earnings due to program losses previously described.

The rates for all periods benefited from tax deductions for foreign derived intangible income, research and development tax credits, dividends paid to our defined contribution plans with an employee stock ownership plan feature and employee equity awards.

Debt Issuance and Commercial Paper

On July 23, 2025, we issued a total of $ 2.0 billion of senior unsecured notes, consisting of $ 500 million aggregate principal amount of 4.15 % Notes due 2028 (2028 Notes), $ 750 million aggregate principal amount of 4.40 % Notes due 2030 (2030 Notes) and $ 750 million aggregate principal amount of 5.00 % Notes due 2035 (2028 Notes and, together with the 2030 Notes and 2035 Notes, the Notes).

Net proceeds of $ 1,985 million were received from the offering after deducting pricing discounts and debt issuance costs, which are being amortized and recorded as interest expense over the term of the Notes.

We will pay interest on the Notes semi-annually in arrears on February 15 and August 15 of each year with the first payment to be made on February 15, 2026.

We may, at our option, redeem the Notes of any series in

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

whole or in part at any time and from time to time at a redemption price equal to the greater of 100 % of the principal amount of the Notes to be redeemed or an applicable make-whole amount, plus accrued and unpaid interest to the date of redemption.

The Notes rank equally in right of payment with all of our existing unsecured and unsubordinated indebtedness.

Additionally, we have agreements in place with financial institutions to provide for the issuance of commercial paper.

The outstanding balance of commercial paper can fluctuate daily and the amount outstanding during the period may be greater or less than the amount reported at the end of the period.

There were no commercial paper borrowings outstanding at September 28, 2025 and December 31, 2024.

All of our commercial paper borrowings had maturities less than three months from the date of issuance.

We may, as conditions warrant, issue commercial paper backed by our revolving credit facility to manage the timing of cash flows.

Revolving Credit Facility

At September 28, 2025 , we had a $ 3.0 billion Revolving Credit Facility with various banks, with the option to increase the commitments under the Revolving Credit Facility by an additional amount of up to $ 500 million (for an aggregate amount of up to $ 3.5 billion), subject to the existing lender approval per the terms and conditions of the agreement.

Effective August 28, 2025, we amended the agreement for the Revolving Credit Facility (Revolving Credit Agreement) to extend the expiration date of the Revolving Credit Agreement from August 24, 2029 to August 24, 2030.

The Revolving Credit Agreement is available for any of our lawful corporate purposes, including supporting commercial paper borrowings.

Borrowings under the Revolving Credit Agreement are unsecured and bear interest at rates set forth in the Revolving Credit Agreement.

There were no borrowings under the Revolving Credit Agreement at September 28, 2025 .

Our effective income tax rates were 16.5 % and 16.4 % for the quarter and nine months ended September 28, 2025 and 15.4 % and 15.6 % for the quarter and nine months ended September 29, 2024.

The higher effective income tax rates for the quarter and nine months ended September 28, 2025 were attributable to the One Big Beautiful Bill Act (the Tax Act) primarily driven by lower tax deductions for foreign derived intangible income partially offset by the favorable resolution of certain federal income tax audit items with the Internal Revenue Service (IRS).

The rates for all periods benefited from research and development tax credits, dividends paid to our defined contribution plans with an employee stock ownership plan feature, tax deductions for foreign derived intangible income and employee equity awards.

On July 4, 2025, the President signed into law the Tax Act.

Key provisions include the permanent reinstatement of immediate expensing for domestic research expenditures, the restoration of full expensing for qualified machinery, equipment and other short-lived assets, and several modifications to existing international tax provisions.

The enactment of the Tax Act resulted in an increase of $ 132 million to income tax expense for the quarter ended September 28, 2025.

We are still awaiting further IRS and Treasury guidance on the Tax Act, but based upon our interpretation of the recently enacted law, we estimate an increase of $ 175 million to income tax expense and a decrease of $ 600 million to cash taxes in 2025 as compared to prior year.

As a result of the Tax Act, we expect to be subject to the corporate alternative minimum tax starting in 2025.

In our Annual Report on Form 10-K for the year ended December 31, 2018, we described our adoption of Accounting Standards Codification (ASC) 606 for certain manufacturing contracts.

In connection with that change and the associated changes to the income recognition rules enacted in the 2017 Tax Cuts and Jobs Act, we correspondingly changed our method of accounting for U.S.

federal income tax purposes with the Internal Revenue Service (IRS).

As part of the IRS Compliance Assurance Process (CAP) program, the IRS initially approved that accounting method change for 2018 and 2019 without any adjustments, stating in writing that our new tax accounting method was an acceptable method that clearly reflected income.

After an additional review of the accounting method change in subsequent years, the IRS issued to us a Revenue Agent’s Report (RAR) for 2018-2019 on May 20, 2025 with an accompanying Notice of Proposed Adjustment (NOPA) for 2018-2020 in relation to our accounting method change (the Proposed Adjustments).

The Proposed Adjustments, which seek approximately $ 4.6 billion of additional federal income tax (excluding interest), are based on the premise that we must recognize revenue as performance obligations on a contract are satisfied and as advance payments are received but must defer costs until delivery of the finished product.

The Proposed Adjustments create a mismatch between revenue and costs, effectively disallow recognition of cost of goods sold for impacted contracts, and result in gross receipts taxation for each year at issue.

We strongly disagree with the IRS’s claims and are pursuing applicable administrative remedies with the IRS Independent Office of Appeals and, if necessary, judicial remedies if an acceptable administrative resolution cannot be reached.

We do not expect resolution of this matter within twelve months and cannot predict with certainty the timing of such resolution.

We believe our reserves for tax contingencies are adequate;

however, if this matter is resolved unfavorably, there could be a material impact on our profitability and future cash flows.

federal income tax purposes with the IRS.

As part of the IRS Compliance Assurance Process (CAP) program, the IRS initially approved that tax accounting method change for 2018 and 2019 without any adjustments, stating in writing that our new tax accounting method was an acceptable method that clearly reflected income.

After an additional review of the tax accounting method change in subsequent years, the IRS issued to us a Revenue Agent’s Report (RAR) for 2018-2019 on May 20, 2025 with an accompanying Notice of Proposed Adjustment (NOPA) for 2018-2020 in relation to our tax accounting method change (the Proposed Adjustments).

The Proposed Adjustments sought approximately $ 4.6 billion of additional federal income tax (excluding interest).

We are in ongoing discussions with the IRS in an effort to resolve the matter.

As of December 31, 2024, our liabilities associated with uncertain tax positions were not material.

As of the quarter ended September 28, 2025, our liabilities associated with uncertain tax positions increased to $ 366 million, primarily attributable to the Proposed Adjustments partially offset by the favorable resolution of certain other federal income tax audit items with the IRS.

As of the quarter ended September 28, 2025, interest and penalties related to uncertain tax

Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

As of December 31, 2024, our liabilities associated with uncertain tax positions were not material.

As of the quarter ended June 29, 2025, our liabilities associated with uncertain tax positions increased to $ 512 million with a corresponding increase to net deferred tax assets primarily attributable to the Proposed Adjustments.

As of the quarter ended June 29, 2025, interest and penalties related to uncertain tax positions, which are included in income tax expense, increased to $ 129 million with $ 103 million representing the cumulative amount related to the Proposed Adjustments.

positions, which are included in income tax expense, increased to $ 112 million with $ 109 million representing the cumulative amount related to the Proposed Adjustments.

NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No.

In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No.

2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.

This guidance removes all references to project stages throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs.

Under the new standard, cost capitalization should only commence when an entity has committed to funding a software project and it is probable the project will be completed and the software will be used for its intended function.

The amendments are effective for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods.

Entities may apply the guidance using a prospective, retrospective or modified transition approach.

Early adoption is permitted as of the beginning of an annual reporting period.

We are currently determining the preferred transition approach and assessing the impact of the ASU on our disclosures and financial statements, including the timing of adoption.

In November 2024, the FASB issued Accounting Standard Update (ASU) No.

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

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The amendments are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The ASU will impact only our disclosures and not our financial condition or results of operations.

The ASU will impact only our disclosures and not our results of operations, financial condition or cash flows.

We are currently evaluating when we will adopt the ASU.

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Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of Lockheed Martin Corporation (the Company) as of June 29, 2025, the related consolidated statements of earnings, comprehensive income and equity for the quarters and six months ended June 29, 2025 and June 30, 2024, and consolidated statements of cash flows for the six months ended June 29, 2025 and June 30, 2024, and the related notes (collectively referred to as the “consolidated interim financial statements”) .

We have reviewed the accompanying consolidated balance sheet of Lockheed Martin Corporation (the Company) as of September 28, 2025, the related consolidated statements of earnings, comprehensive income and equity for the quarters and nine months ended September 28, 2025 and September 29, 2024, and consolidated statements of cash flows for the nine months ended September 28, 2025 and September 29, 2024, and the related notes (collectively referred to as the “consolidated interim financial statements”).

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements for them to be in conformity with U.S.

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Tysons, Virginia

July 22, 2025

October 21, 2025

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements